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Frist was given data on HCA holdings

Trustees' records at odds with remarks from GOP leader

WASHINGTON -- Senate majority leader Bill Frist had been given considerable information about his stake in his family's hospital company, according to records that are at odds with his past statements that he did not know what was in his stock holdings.

Managers of the trusts, which the Tennessee Republican had once described as ''totally blind," regularly informed him when they added new shares of HCA Inc. or other assets to his holdings, according to the documents.

Since 2001, the trustees have written to Frist and the Senate 15 times detailing the sale of assets from or the contribution of assets to trusts of Frist and his family.

The letters provided included notice of the addition of HCA shares worth $500,000 to $1 million in 2001, as well as HCA stock worth $750,000 to $1.5 million in 2002.

The trust agreements require the trustees to inform Frist and the Senate whenever assets are added or sold.

The letters seemed to undermine one of the major arguments the senator has used throughout his political career to rebut criticism of his ownership in HCA: that the stock was held in blind trusts beyond his control, and that he had little idea of the extent of those holdings.

The extent of Frist's knowledge of the inner workings of his trusts and his family's healthcare company is related to a federal investigation of possible insider trading involving the liquidation this summer of Frist's HCA stock. Within weeks of Frist's decision to sell his holdings in June, HCA shares fell sharply because of a weak earnings report. Frist has said that he possessed only publicly available, not ''insider" information about the company when he directed the sale and that therefore he had done nothing wrong.

Last week, Frist told reporters he is ''absolutely confident in the outcome" of the inquiries by the Justice Department as well as the Securities and Exchange Commission because he ''acted properly at every point." He declined to address specifics but said he is providing information as quickly and fully as possible.

Frist, a heart surgeon, has been involved in shaping national healthcare legislation, including passage of the Medicare prescription drug benefit, while maintaining a major financial interest in his family-founded business.

Two watchdog organizations -- Citizens for Responsibility and Ethics in Washington and the Foundation for Taxpayer and Consumer Rights -- filed complaints with the Senate Select Committee on Ethics this year charging Frist with having a conflict of interest and questioning why he sold his shares after a decade of saying he did not need to.

Frist and his family have a dozen federal trust accounts, which are essentially portfolios of stock controlled by professional money managers.

Under the terms of his ''qualified" trust agreements set up in 2000, Frist is barred from contacting the managers except under specific circumstances. But the managers are required to contact him when funds they control undergo certain changes, an arrangement similar to those of several other senators.

In January 2003, after winning election as majority leader, Frist was asked on CNBC whether his HCA holdings made it hard for him to push for changes in Medicare, a federal health program for seniors that added to the hospital company's revenue. ''I think really for our viewers it should be understood that I put this into a blind trust," he replied. ''So as far as I know, I own no HCA stock." He added the trust was ''totally blind. I have no control."

Two weeks before that interview, M. Kirk Scobey Jr., a Frist trustee, informed the senator in writing that one of his trusts had received HCA stock valued at between $15,000 and $50,000.

Frist ''could have been more exact in his comments," said Bob Stevenson, spokesman for Frist, adding that Frist might better have said he did not know to what extent he owned HCA shares.

Disclosures by the trustees to the Senate and to Frist indicate that Frist and his family probably owned a great deal of HCA stock at the time. When Frist's federal trusts were created in late 2000, the trustees disclosed that one trust alone contained between $5 million and $25 million in HCA shares and that each of seven other trusts held more than $1 million of the stock.

Frist was notified in November 2002 that 14,781 HCA shares had been sold from one of his trusts. But he was not told that all his HCA shares had been disposed of until this summer -- after he had directed his trustees to sell them all, the documents indicate.

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